‘Fixer Upper’ star Chip Gaines is sued for fraud by former business partners

Chip Gaines, who co-hosts the popular HGTV show with his wife, Joanna, fired a shot on Twitter Saturday after his former business partners filed a $1 million fraud lawsuit against him last week in a Texas state court.

Magnolia Real Estate Co. co-founders, lawyers John L. Lewis and Richard L. Clark, allege that Gaines bought them out of the company without telling them HGTV planned to broadcast “Fixer Upper” nationally.

The three men founded the company together in 2007 and for the first six years largely operated out of Waco with one real estate agent, according to the lawsuit. Since the show’s debut, Magnolia has grown to employ more than 93 agents across Texas, the lawsuit says.

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Gaines allegedly paid the two men $2,500 each for their shares in the company. But Lewis and Clark charge that he didn’t tell them about the HGTV deal “and that the show prominently featured the ‘Magnolia’ brand name,” according to KWTX in Waco, Texas.

“With this insider information in hand, Chip Gaines convinced plaintiffs to sell their membership interests in Magnolia Realty quickly to him before a public announcement that ‘Fixer Upper’ was picked up by HGTV,” the lawsuit charges.

The lawsuit accuses Gaines of pressuring Lewis and Clark to sell “before they discovered the company’s value was radically enhanced by ‘Fixer Upper.’”

According to E! News, the filing states “... Chip Gaines conspired to eliminate his business partners — notwithstanding their longstanding friendship — in order to ensure that he alone would profit from Magnolia Realty’s association with ‘Fixer Upper.’”

The partners charge that “Chip became so fixated on securing the Magnolia name that he didn’t care if he offended or threatened anyone along the way.”

When Clark made it clear he wasn’t happy with Gaines trying to lower the buyout even more, Gaines sent Lewis a text advising him to tell Clark “to be careful,” the lawsuit says.

The warning text allegedly read: “I don’t come from the nerdy prep school he’s from. And when people talk to me that way they get their asses kicked. And if he’s not ready to do that he better shut his mouth. I’m not the toughest guy there is, but I can assure you that would not end well for (R)ick.”

When news of the lawsuit broke on Friday, Gaines responded with a Bible verse on Twitter: “The light shines in the darkness, and the darkness has not overcome it.”

The light shines in the darkness, and the darkness has not overcome it.

Gaines’ spokesman would not comment on the lawsuit. But his attorney, Jordan Mayfield, told KWTX “we are confident that these claims will be found to be meritless, and it is disappointing to see people try to take advantage of the hard work and success of Chip and Joanna Gaines.”

Chip and Joanna Gaines, hosts of the wildly popular HGTV’s “Fixer Upper”, talked with the media prior to making their appearance Saturday at the Greater Kansas City Home Show at Bartle Hall. Joe Ledfordjledford@kcstar.com